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Wells Fargo Q3 Earnings Call Highlights Higher Interest Income Outlook
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Key Takeaways
WFC expects $50 billion in 2026 net interest income, with about $13 billion projected for the fourth quarter.
Wells Fargo's deposits rose 11% to $1.48 trillion, driven by growing interest-bearing commercial balances.
WFC reported a 16.3% return on tangible common equity, nearing its 17%-18% target despite trading headwinds.
Wells Fargo & Company (WFC - Free Report) executives highlighted improving returns and continued loan growth during the third quarter of 2026 earnings call, while reaffirming full-year guidance for net interest income and expenses.
Management also addressed slower trading activity, higher interest rates, deposit trends and investments in consumer banking and technology that could support future profitability.
The company reported earnings of $1.87 per share, which surpassed the Zacks Consensus Estimate of $1.85. Revenues were $21.87 billion, missing the consensus estimate of $22.15 billion.
Wells Fargo & Company Price, Consensus and EPS Surprise
Chief Financial Officer Michael Santomassimo reiterated expectations for approximately $50 billion in full-year 2026 net interest income, with about $13 billion anticipated in the fourth quarter. Management expects the net interest margin to remain stable sequentially.
Santomassimo attributed the outlook to growing loan and deposit balances, fixed-rate asset repricing and higher securities holdings. Higher rates should boost net interest income outside Markets, while that business's rate sensitivity offsets it.
Responding to Truist Securities, Santomassimo clarified that Markets net interest income should contribute roughly $1.8 billion for the year, slightly below the earlier $2 billion assumption, with non-Markets income making up the difference.
Wells Fargo Defends Its Deposit Growth Strategy
Average deposits rose 11% year over year to $1.48 trillion, reflecting growth in interest-bearing commercial balances. Santomassimo emphasized that these deposits also generate payments-related fees.
During questioning from Morgan Stanley about improving the deposit mix, he said low-cost operating balances would develop gradually alongside growth in consumer relationships and treasury management. Interest-bearing deposits should continue expanding faster.
Addressing UBS questions, Santomassimo said that the larger commercial mix could produce a higher aggregate deposit beta than in the previous rate cycle, although pricing behavior within individual businesses remained consistent with historical patterns.
WFC Sees More Profit Potential in Consumer Lending
Chief Executive Officer Charlie Scharf emphasized continued consumer account acquisition, including more than 660,000 new credit card accounts and a fourteenth consecutive quarter of year-over-year primary checking account growth.
During questioning from Deutsche Bank, Santomassimo said that card openings could remain around 600,000 to 700,000 quarterly. He expects newer card-account cohorts to contribute more significantly to profitability in 2027 and 2028.
Auto originations grew 15% year over year. Santomassimo said that manufacturer partnerships and broader near-prime lending supported returns, although persistently elevated rates could compress spreads.
Wells Fargo Balances Trading Volatility With Banking Gains
Corporate and Investment Banking revenues increased 3%, supported by 8% growth in Banking. Scharf cited higher merger-and-acquisition and underwriting fees as evidence of progress from expanded client coverage.
Markets revenues declined 1% year over year. Santomassimo explained that sharp interest-rate movements during September dampened fixed-income valuations and client activity, leaving trading results below earlier expectations.
Responding to Evercore ISI, Santomassimo emphasized opportunities to deepen financing and trading relationships. He noted that individual investment banking transactions can shift fee realization between quarters.
WFC Maintains Expense Discipline and Capital Flexibility
Santomassimo reaffirmed approximately $55.7 billion in full-year noninterest expenses. Stronger efficiency savings were offsetting revenue-related costs running about $400 million above original expectations.
Management expects to maintain the Common Equity Tier 1 ratio between 10% and 10.5%. The ratio stood at 10% at quarter-end, while share repurchases totaled $2.5 billion.
Responding to UBS, Santomassimo described buybacks as a flexible capital allocation tool after assessing lending opportunities and risks. Management estimates that proposed capital rules could reduce risk-weighted assets by about 7%.
Wells Fargo Pursues Payments and AI Opportunities
Scharf discussed the launch of tokenized deposits on Wells Fargo's proprietary blockchain platform. Responding to Bank of America, Santomassimo said that early cross-border payments reached beneficiary accounts in two minutes or less, although volumes remained small.
Scharf also highlighted AI applications across wealth management, software development, customer servicing and risk management. He emphasized the benefits of deploying technology across the company's operations.
Management nevertheless acknowledged financing risks surrounding AI infrastructure investments and reiterated its commitment to disciplined underwriting limits.
WFC Focuses on Sustainable Returns
Scharf highlighted a 16.3% return on tangible common equity, approaching management's 17% to 18% target. He emphasized continued investments while avoiding outsized risks.
Management described consumer and commercial credit as resilient but acknowledged that sustained higher rates and inflation could increase financial pressure over time.
Its Value and Growth Scores are D, Momentum Score is C and VGM Score is D. These relatively weak grades provide limited support under the Zacks framework, which favors higher-ranked stocks with A or B Style Scores. The Zacks Rank can change as analysts revise earnings estimates following the quarterly results.
View the Zacks #1 Rank List
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Wells Fargo Q3 Earnings Call Highlights Higher Interest Income Outlook
Key Takeaways
Wells Fargo & Company (WFC - Free Report) executives highlighted improving returns and continued loan growth during the third quarter of 2026 earnings call, while reaffirming full-year guidance for net interest income and expenses.
Management also addressed slower trading activity, higher interest rates, deposit trends and investments in consumer banking and technology that could support future profitability.
The company reported earnings of $1.87 per share, which surpassed the Zacks Consensus Estimate of $1.85. Revenues were $21.87 billion, missing the consensus estimate of $22.15 billion.
Wells Fargo & Company Price, Consensus and EPS Surprise
Wells Fargo & Company price-consensus-eps-surprise-chart | Wells Fargo & Company Quote
WFC Expects Fourth-Quarter Interest Income Growth
Chief Financial Officer Michael Santomassimo reiterated expectations for approximately $50 billion in full-year 2026 net interest income, with about $13 billion anticipated in the fourth quarter. Management expects the net interest margin to remain stable sequentially.
Santomassimo attributed the outlook to growing loan and deposit balances, fixed-rate asset repricing and higher securities holdings. Higher rates should boost net interest income outside Markets, while that business's rate sensitivity offsets it.
Responding to Truist Securities, Santomassimo clarified that Markets net interest income should contribute roughly $1.8 billion for the year, slightly below the earlier $2 billion assumption, with non-Markets income making up the difference.
Wells Fargo Defends Its Deposit Growth Strategy
Average deposits rose 11% year over year to $1.48 trillion, reflecting growth in interest-bearing commercial balances. Santomassimo emphasized that these deposits also generate payments-related fees.
During questioning from Morgan Stanley about improving the deposit mix, he said low-cost operating balances would develop gradually alongside growth in consumer relationships and treasury management. Interest-bearing deposits should continue expanding faster.
Addressing UBS questions, Santomassimo said that the larger commercial mix could produce a higher aggregate deposit beta than in the previous rate cycle, although pricing behavior within individual businesses remained consistent with historical patterns.
WFC Sees More Profit Potential in Consumer Lending
Chief Executive Officer Charlie Scharf emphasized continued consumer account acquisition, including more than 660,000 new credit card accounts and a fourteenth consecutive quarter of year-over-year primary checking account growth.
During questioning from Deutsche Bank, Santomassimo said that card openings could remain around 600,000 to 700,000 quarterly. He expects newer card-account cohorts to contribute more significantly to profitability in 2027 and 2028.
Auto originations grew 15% year over year. Santomassimo said that manufacturer partnerships and broader near-prime lending supported returns, although persistently elevated rates could compress spreads.
Wells Fargo Balances Trading Volatility With Banking Gains
Corporate and Investment Banking revenues increased 3%, supported by 8% growth in Banking. Scharf cited higher merger-and-acquisition and underwriting fees as evidence of progress from expanded client coverage.
Markets revenues declined 1% year over year. Santomassimo explained that sharp interest-rate movements during September dampened fixed-income valuations and client activity, leaving trading results below earlier expectations.
Responding to Evercore ISI, Santomassimo emphasized opportunities to deepen financing and trading relationships. He noted that individual investment banking transactions can shift fee realization between quarters.
WFC Maintains Expense Discipline and Capital Flexibility
Santomassimo reaffirmed approximately $55.7 billion in full-year noninterest expenses. Stronger efficiency savings were offsetting revenue-related costs running about $400 million above original expectations.
Management expects to maintain the Common Equity Tier 1 ratio between 10% and 10.5%. The ratio stood at 10% at quarter-end, while share repurchases totaled $2.5 billion.
Responding to UBS, Santomassimo described buybacks as a flexible capital allocation tool after assessing lending opportunities and risks. Management estimates that proposed capital rules could reduce risk-weighted assets by about 7%.
Wells Fargo Pursues Payments and AI Opportunities
Scharf discussed the launch of tokenized deposits on Wells Fargo's proprietary blockchain platform. Responding to Bank of America, Santomassimo said that early cross-border payments reached beneficiary accounts in two minutes or less, although volumes remained small.
Scharf also highlighted AI applications across wealth management, software development, customer servicing and risk management. He emphasized the benefits of deploying technology across the company's operations.
Management nevertheless acknowledged financing risks surrounding AI infrastructure investments and reiterated its commitment to disciplined underwriting limits.
WFC Focuses on Sustainable Returns
Scharf highlighted a 16.3% return on tangible common equity, approaching management's 17% to 18% target. He emphasized continued investments while avoiding outsized risks.
Management described consumer and commercial credit as resilient but acknowledged that sustained higher rates and inflation could increase financial pressure over time.
Zacks Rank and Style Scores Signal Caution
WFC currently carries a Zacks Rank #3 (Hold), reflecting a neutral near-term ranking rather than the stronger performance potential associated with top-ranked stocks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Its Value and Growth Scores are D, Momentum Score is C and VGM Score is D. These relatively weak grades provide limited support under the Zacks framework, which favors higher-ranked stocks with A or B Style Scores. The Zacks Rank can change as analysts revise earnings estimates following the quarterly results.